The latest issue of the PayProp Rental Index is out now, and comes with good news for rental agents and landlords: rents rose in every province for the first time since Q2 2022.
The Free State, the only province to experience negative year-on-year rental growth in Q1, recorded growth of 1.0% in Q2. The average rent in the province rose to R6 391.
At the national level, rental growth rose for a seventh successive quarter. Q2’s national figure of 4.4% took the average rent in South Africa to R8 375, and is the fastest growth seen since 2017.
Most provinces recorded rent rises in line with the national average, but apart from the Free State there were also a few other outlier performances. In the Western Cape, rents grew by a fairly sluggish 2.8%, although the average rent of R9 730 was still the highest in the country.
The North West, meanwhile, smashed the national average with rental growth of 9.7% in Q2, while the Northern Cape managed 6.8% – down significantly from 10.2% in Q1, but still the second fastest rate in the quarter under review.
Putting rental growth into context
On the flip-side of the coin, rental increases may not always be viewed positively.
Since the pandemic, rental professionals have been worried about tenants’ ability to afford rental increases, and accelerating rental growth may ring alarm bells. But is it warranted?
No, according to the PayProp Rental Index. Transactional and referencing data from our rental processing platform shows that most tenants’ incomes grew faster than rents between Q2 2022 and Q2 2023, improving affordability. Inflation has also fallen steadily this year, dropping to 4.7% in August. If current economic trends continue, inflation could fall below both income growth and rental growth, potentially putting more money in the pockets of tenants, landlords and agents alike.
To get our full analysis of national and provincial rental growth, tenant income and spending metrics, as well as arrears, download the PayProp Rental Index Q2 2023 now.